- The DXY index is moving defensively near 32-month lows.
- Risk appetite dominates sentiment in global markets.
- In the NFP jobs report, factory orders and several Fed speeches feature prominently on today’s economic calendar.
The US dollar DXY index, which measures the strength of the dollar against a basket of major currencies, extends the downward movement and is approaching recent lows near the 90.50 region.
DXY US Dollar Index Now Turns Attention to Data
The DXY index loses ground for the fourth day in a row at the end of the week and it moves near the lows of the last 32 months in the region of 90.50.
Hopes around coronavirus vaccines and the likelihood of further monetary and fiscal stimulus in the US under Biden they continue to dominate investor sentiment, and not only do they put additional pressure on the dollar, but it also opens the door for a deeper pullback in the short term. .
Turning to US data, the November NFP nonfarm payroll report will focus investors’ attention at the start of the American session, along with factory orders data, NFP figures Trade Balance and Speeches by Chicago Fed Governor C. Evans, and M. Bowman of the FOMC.
What can we expect around the USD?
The bearish stance around the US dollar remains strong and has forced the DXY index to break out of key support at the 91.00 level to record new lows around 90.50. The improved risk appetite sentiment has been bolstered by a clearer US political landscape combined with upbeat news on vaccines and better growth prospects. In addition, hopes for additional fiscal stimulus have resurfaced, which together with the Federal Reserve’s “lower rates longer” stance is seen as keeping the USD under additional pressure for now.
Relevant levels of the US dollar DXY index
At the time of writing, the DXY index is down 0.04% on the day, trading at 90.67. Immediate support is at 90.50 (December 3 low), followed by 89.22 (April 2018 low) and 88.94 (March 2018 low). On the other hand, a break above 91.92 (23.6% Fibonacci retracement of the 2017-2018 dip), would open the door to 92.80 (November 23 high) and finally 93.20 (November 11 high).
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